When Jon Nordmark decided to invest in UsingMiles.com, he had already been involved in six Internet start-ups as an investor.

The man who told him he should meet with Austin Slattery Veith about the company, which helps people track and use their frequent-flier miles, was a top Google executive, and Veith already had been through the prestigious Boulder TechStars entrepreneurial program.

Nordmark, now the CEO of UsingMiles.com, told Boulder County Judge Norma Sierra on Monday that he had no idea the money he decided to invest in UsingMiles.com would be -- prosecutors allege -- diverted to Veith's personal use, including gambling debts, a $10,000-a-month apartment in New York City, a $4,500-a-month "party house" in Breckenridge and a $2,000 Neapolitan mastiff puppy from Hungary.

Veith faces multiple felony counts of securities fraud and theft related to fundraising efforts for the company he founded.

Nordmark testified at a preliminary hearing in the case. Sierra determined that prosecutors have enough evidence to proceed with the case. An arraignment is scheduled for Sept. 23.

Veith did not have an attorney with him at the hearing. He did not make a statement to the court, but he objected to one of his pre-trial probation conditions -- that he not associate himself with the UsingMiles.com name or brand.

"The company didn't exist before me," he said. "People associate UsingMiles.com with me. These are allegations, and this is part of my resume."

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Sierra said Veith could continue to refer to himself as the founder, given that it is a historical fact, but he should be clear that he is no longer employed there.

Prosecutors say Veith, 32, diverted a total of $450,000 from UsingMiles.com.

According to an arrest affidavit, bank records show Veith wired nearly $85,000 of investor funds to various Las Vegas casinos to feed an extensive gambling habit and spent $23,532 of ill-gotten funds in November 2009 alone on clothes, ski lift tickets, hotels, Apple iTunes and plane tickets.

Veith, who once owned former Boulder tanning salon Sol Tan, started up online frequent-flier mileage tracking website UsingMiles.com in 2008 with a former classmate at the University of Colorado business school.

The pair used $12,000 in seed money they attained after graduating from the Boulder TechStars entrepreneurial program to help launch UsingMiles, the affidavit states.

Eventually iSherpa, a Greenwood Village-based capital venture firm, put $2 million into the online venture.

But by late last year, Nordmark and others discovered that third-party developers for the website hadn't been paid in months and that money was missing, prosecutors said.

Around the same time, some of Veith's closest investors and business partners found out that while they were investing with Veith, he had been on probation for a financial fraud he committed in 2006.

In that case, Veith had been accused of defrauding his boss at a Lafayette restaurant of more than $18,000. He pleaded guilty to theft in 2008 and was barred from engaging in business transactions without the approval of his probation officer.

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